China’s central bank’s (PBOC) deputy head Chen was on the wires over the last hour, commenting on the domestic currency and monetary policy.
Key Quotes:
Spillover effect from global monetary policy divergence is increasing
Global cooperation based on coordinated economic policies may weaken
If emerging markets cannot solve the issue of duration mismatch during deleveraging process financial turmoil is possible
China’s inflation is currently at relatively low level, conducive to a stable Yuan
Yuan stable against a basket of currencies, no basis for persistent depreciation
The benefit of Yuan depreciation for exports is limited
Bank of international settlements estimates Yuan real effective exchange rate is around 10 pct overvalued
China is still in the process of perfecting and improving open market operations
(Market News Provided by FXstreet)